Lebanese ABS builds on real estate boom, but that's just the beginning, local experts say

Lebanese securitizations are certain to explode onto the scene following the launch of the country's first transaction earlier this year by the Banque Europeanne pour le Moyen-Orient Securitizations (BSEC). Sources said the ABS market is toying with a number of ideas that are expected to materialize as early as next month.

"Looking at the market, it's the real estate related deals that are very well appreciated; the main drivers at this point are CMBS, single-credit CLO's, and hybrid convertible bonds (for real estate companies)," said Iyad Boustany, vice president at BSEC. The Lebanese market's inaugural issue is a $6 million deal BSEC led for Solidere, the real estate company in charge of rebuilding the Central District in Beirut. The SPV, Indigo Trust, issues credit-linked notes that mature in April 2005 and offer a fixed, yearly return of 5.75%. The notes bear a call option on Solidere shares on the maturing date, meaning they can outperform the minimum guaranteed yield in the event of a share price increase.

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